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S&P 500 Companies' Quarterly Earnings Growth Eases Amid Healthcare Drop, Oppenheimer Says

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S&P 500 Companies' Quarterly Earnings Growth Eases Amid Healthcare Drop, Oppenheimer Says

S&P 500 companies' quarterly earnings growth rate eased from a week ago amid a drop in the healthcare sector, though the results continue to be "strong" overall, Oppenheimer Asset Management said Monday.

Some 89% of the companies in the benchmark equity index have reported results in the ongoing cycle, with earnings rising about 51% year over year, compared with 57% growth a week ago. Revenue growth eased to 14.6% from 14.8%, the report showed.

The healthcare sector saw earnings fall 7.5% on an annual basis, compared with a 20% jump a week ago.

In the sector, Merck (MRK) swung to a quarterly loss amid an acquisition charge, while Pfizer's (PFE) second-quarter adjusted earnings fell year over year last week.

The remaining 10 S&P 500 sectors reported year-over-year profit growth, with energy up 147%. Consumer discretionary and communication services soared more than 110% each, Oppenheimer said Monday.

Bottom-up estimates from FactSet put analysts' projected earnings growth at 24% prior to the start of the latest reporting season, according to the brokerage.

In terms of sales, energy continued to lead the sectors with a 42% annual gain for the quarter, followed by technology's 27% advance.

"Continued strong results reported for (the second-quarter) earnings season, along with economic data that showed acceleration in services and manufacturing activity even as jobs declined in July, lent support for the (Federal Reserve) to remain 'on hold'," Oppenheimer Asset Management Chief Investment Strategist John Stoltzfus said in a note to clients.

"In addition to these solid reported results, a number of company managers in key sectors have provided positive forward guidance, suggesting that conditions are favorable for further improvement ahead," Stoltzfus wrote.

Only 11 S&P 500 companies are scheduled to report results this week, including Cisco (CSCO), Applied Materials (AMAT), and Simon Property (SPG).

Markets are pricing in a 50% probability that the Fed will leave its benchmark lending rate unchanged in September, with the remaining odds in the favor of a 25-basis-point increase, according to the CME FedWatch tool.

Price: $130.65, Change: $+2.07, Percent Change: +1.61%

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